Pension fund, inflated Kusile contracts forced Eskom to delay annual results

By Antony Sguazzin

(Bloomberg) — Eskom Holdings SOC Ltd., the indebted South African state power utility, will announce its annual results this week after a three-month delay.

The company was forced to delay their publication because of over-payments related to the construction of its new Kusile power station and issues with its pension fund, people familiar with the situation said. The plant disbursements could have consequences if the contracts don’t comply with the Public Finance Management Act, which regulates spending by government entities and is designed to minimize corruption.

“Eskom experienced some delays due to the lockdown resulting in late access to sites by the auditors and the resolution of some accounting and PFMA-related matters,” the utility said in a response to queries. “Eskom intends to release the annual results by the end of October to ensure compliance with legislation and regulations.”

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In July, Eskom said the results for year through March had been delayed due to the coronavirus and an associated lockdown. The utility’s results for the three previous financial years were published within four months of the year-end.

The company has struggled to properly account for spending on Kusile, said the people, who asked not to be identified as the information isn’t public. In June, Eskom estimated it had overpaid contractors working on the new plant by 4 billion rand ($247 million).

The budget for Kusile and Medupi, another coal-fired plant of a similar size, has ballooned to more than 450 billion rand from an initial amount of about a third of that. The cost overruns at the long-delayed plants have been a major contributer to Eskom amassing 488 billion rand in debt, which it is struggling to service.

The Eskom Provident and Pension Fund oversees the pensions of current and former employees. The utility has more than 40,000 staff.